We meet many investors who don’t think about doing a 1031 exchange until after they’ve sold their property and realize how much they’ll owe in capital gains taxes. While we can still help people in this scenario find quality cash-flowing replacement properties, it’s generally better to plan well in advance to ensure your transaction is tax-free. With proper planning in place, you can get the support you need to easily meet all the requirements while reducing the stress of the 1031 exchange timeline.
Below, we outline the timeline for 1031 exchanges, common mistakes, and how RealWealth can help set you up for success.
Quick Answer: What is the 1031 Exchange Timeline?
A 1031 exchange follows an 8-step timeline with two critical IRS deadlines that cannot be extended:
Critical Deadlines (Start When You Close Your Sale):
- Day 1-45: Identify up to 3 replacement properties in writing to your Qualified Intermediary
- Day 1-180: Close on at least one replacement property (OR your tax return due date, whichever comes first)
The 8-Step Process:
- Step 1: Decide to do a 1031 exchange (60-90 days before selling)
- Step 2: List your property for sale
- Step 3: Hire a Qualified Intermediary (BEFORE closing)
- Step 4: Search for replacement properties (start immediately)
- Step 5: Close on sale of relinquished property (Day 0 – timeline starts)
- Step 6: Identify replacement properties (by Day 45 – no extensions!)
- Step 7: Go under contract on replacement property (Days 46-150)
- Step 8: Close on replacement property (by Day 180 – no extensions!)
Key Point: These deadlines are STRICT. The IRS does not grant extensions for any reason—not for holidays, weekends, natural disasters, or financing delays. Missing a deadline by even one day disqualifies your entire exchange and triggers capital gains taxes.
Average 1031 Exchange Timeline: Most successful exchanges take 120-150 days total when properly planned. Rushing to meet the 45-day deadline is the #1 mistake investors make.
A Typical Timeline for a 1031 Exchange
Please note that this can differ from person to person. This is by no means a one-size-fits-all timeline.
Step 1: Decide you want to do a like-kind exchange
The first step on the typical timeline for a 1031 exchange is simple: decide to use this real estate investing strategy. Spend a bit of time pondering if it is the best strategy for your investing goals. Depending on your situation, it may not make sense to do a 1031 exchange.
Perhaps you need or want the cash from your investment property and are willing to pay capital gains tax. Or, maybe you don’t have the energy to learn all the 1031 exchange rules or don’t want to deal with the hassle of finding replacement properties and meeting all of the deadlines.
For many investors, this strategy pays off, allowing them to double or even triple their monthly cash flow by selling one high-priced property in a bubble market for several cash-flowing properties in more affordable markets around the country, such as Cleveland, Indiana, or Birmingham.
If this sounds like your situation, a 1031 exchange is definitely worth discussing with your accountant.
Ready to start looking at markets? Compare cash flow and appreciation data across the top 1031 exchange markets.
Step 2: Put your property on the market
You can put your property up for sale as usual, but make sure to talk to your real estate agent about adding 1031 exchange lingo into the listing paperwork and contracts. Doing so alerts potential buyers, as they must be willing to work within your 1031 exchange timeline.
Ed & Ann’s 1031 Exchange Success Stories
#1: Ed (Maryland → San Antonio, Texas)
- Real data: Sold for $340K, bought $624,900 duplex in San Antonio
- 2.8x cash flow increase ($2,000/year → $5,592/year)
- Went from 1.2% ROE (return on investment) to 3.6% ROE
- Hands-on to hands-off management
- Got a special 3.75% financing rate through RealWealth’s network
#2: Ann (San Diego → Alabama)
- Real data: Sold $930K STR in San Diego (negative cash flow!)
- Bought four properties across Alabama for $957,900
- Went from NEGATIVE cash flow to $29,483/year positive
- 9.8% return on equity
- Diversified across 4 Alabama cities (Huntsville, New Market, Birmingham, Bessemer)
Need help Finding replacement properties fast?
Join RealWealth (it’s free!) for expert guidance and access to all our 1031 Exchange resources.
Step 3: Find a Qualified Intermediary
When looking for a Qualified Intermediary (QI), it’s important to look for someone with experience with the type of exchange you’d like to do (e.g., if you’re doing a reverse exchange, find a QI who knows this process backward and forward). Ideally, your 1031 exchange qualified intermediary has performed thousands of successful exchanges and has many positive client reviews.
Investor tip: Before you begin your search, keep in mind that the 1031 exchange intermediary industry is not well-regulated. Be very careful about whom you use, and be sure they will not invest your money in risky ways while you are between purchases. Learn everything about Qualified Intermediaries and how to find the right one.
How to find a great qualified intermediary
- Get a referral: Ask an escrow officer, friends, or family
- Research online
- Check out client reviews on third-party sites
- To save time, become a RealWealth member (100% free). We have worked with the same reputable 1031 exchange facilitator for over a decade. We know they are great, because we use them too! Let us introduce you →
When to Hire Your Qualified Intermediary
You MUST hire your QI before closing on the sale of your relinquished property. If you receive the sale proceeds directly, even for one day, you have “constructive receipt” of the funds, which immediately disqualifies your 1031 exchange, and you’ll pay capital gains taxes.
Ideal timeline: Hire your qualified intermediary for your 103 exchange 30-60 days before your expected sale closing date. This gives them time to prepare all necessary documentation and coordinate with your title company.
Step 4: Look for replacement properties
As I mentioned above, it’s better to have a strategy for finding cash-flowing replacement properties in place before you sell your rental property. Because once you sell, the 45-day countdown begins. While it is definitely possible to find high-quality properties that cash flow, it can be more challenging with limited time.
At RealWealth, helping investors find cash-flowing 1031 exchange replacement properties is one of our specialties. Having done many 1031 exchanges ourselves, we are very familiar with the process. We can connect you with the right resources and offer guidance. If you are ready to take the next step, join RealWealth today and set your transaction up for success!
Step 5: Negotiate & close on the sale of your relinquished property
The person buying your property must know you are doing a 1031 exchange. Ensure all paperwork clearly states this, as the buyer must comply with specific rules. If you have any questions or concerns, talk with your real estate agent or qualified intermediary.
Work with your qualified intermediary, title company, and attorney to handle the closing. Once the property has been officially relinquished, the funds from the transaction will be transferred to your 1031 exchange qualified intermediary’s bank account for safekeeping.
Step 6: Identify your replacement properties within 45 days
You’ve closed, and the funds have been deposited into your QI’s bank account. Congrats! Now is the time to identify your replacement properties. You can identify up to three properties OR more than three properties if:
You close on 95% of them, OR the total value of all identified properties is less than 200% of the sales price of the property you relinquished.
Learn the 12 rules for identifying cash-flowing replacement properties.
The Three Identification Rules:
You have three options for identifying replacement properties:
- Three-Property Rule: Identify up to 3 properties of any value (most common)
- 200% Rule: Identify more than 3 properties, but their combined value cannot exceed 200% of your relinquished property’s value
- 95% Rule: Identify unlimited properties, but you must close on properties representing at least 95% of the total identified value
Your identification must be:
- In writing
- Signed by you
- Submitted to your Qualified Intermediary
- Include legal descriptions or street addresses
- Received by 11:59 pm on Day 45 (not postmarked—RECEIVED)
Common Mistake: Verbally telling your QI what properties you want does NOT count. It must be in writing with your signature.
Learn how to identify high-cash-flow replacement properties.
The Two Non-Negotiable 1031 Exchange Timeline Deadlines
45-Day Identification Deadline
You have exactly 45 calendar days from the closing date of your relinquished property to identify up to 3 replacement properties in writing to your Qualified Intermediary.
No extensions. No exceptions. Weekends and holidays count.
If you miss this deadline by even one day, your entire 1031 exchange is disqualified and you will owe capital gains taxes on the full amount.
180-Day Purchase Deadline
You must close on at least one of your identified replacement properties within 180 calendar days from the closing date of your relinquished property, OR by the due date of your tax return (with extensions) for that tax year—whichever comes first.
No extensions. No exceptions. Weekends and holidays count.
If you miss this deadline, your entire 1031 exchange is disqualified and you will owe capital gains taxes on the full amount.
Important: Both deadlines run concurrently from Day 0 (the day your relinquished property closes). You do NOT get “45 days plus 180 days.” You get 180 days total, with identification required by day 45.
Learn the seven 1031 exchange rules | Connect with a Qualified Intermediary
Step 7: Choose your first-choice property and sign the contract
For most investors, there is typically one property that stands out as their first choice. Getting that property under contract and opening escrow as soon as possible is key. The seller will also need to know about your 1031 exchange.
You can also go under contract on your second, third, and fourth-choice properties. Just make sure to include contingency clauses so you can back out later if you can’t snag your first choice.
Note: It is possible to purchase more than one replacement property when doing a 1031 exchange. This scenario happens often when people sell $1 million+ properties in areas like the Bay Area or Manhattan for properties in more affordable markets like Baltimore or Detroit. Many California investors use 1031 exchanges to increase cash flow dramatically.
Step 8: Close on your replacement property
The final step of the 1031 exchange timeline is to close on your replacement property. Your qualified intermediary will send your money to the title company or attorney, and your property will close. This allows you to defer paying capital gains tax until you choose to sell in the future.
In an ideal world, you can avoid paying capital gains forever by continuing to exchange your replacement properties for new properties.
Watch our free 1031 Exchange Masterclass to learn more about selling smartly and deferring capital gains taxes.
7 Common 1031 Exchange Timeline Mistakes (And How to Avoid Them)
Even experienced investors make timing mistakes that can cost tens of thousands in taxes. Here are the most common errors:
Mistake #1: Starting the Search Too Late
The Problem: Waiting until after you close on the relinquished property to start looking for replacement properties, or until after the 45-day identification period begins. Delaying the search for 1031 exchange replacement properties leaves you with limited time to find, evaluate, and identify properties, which can lead to rushed decisions and suboptimal choices.
The Solution: We always suggest that you start building relationships with trusted teams and vetted property managers BEFORE listing your relinquished property for sale. This gives you the advantage of knowing what real estate markets you’d like to focus on and what properties you will identify. Have 5-10 pre-vetted options ready before Day 0.
Mistake #2: Misunderstanding “45 Days”
The Problem: Investors often think they have 45 business days or that the deadline extends if Day 45 falls on a weekend.
The Solution: It’s 45 calendar days. Weekends count. Holidays count. If Day 45 is a Saturday, your deadline is Saturday at 11:59 pm—NOT Monday.
Mistake #3: Verbal Identification
The Problem: Telling your qualified intermediary verbally or via email which properties you want without proper written identification.
The Solution: Always use your QI’s official identification form for property selection. This form should include legal descriptions or street addresses and must be submitted with your signature before Day 45.
Investor tip: The 1031 exchange qualified intermediary RealWealth recommends that investors have all the necessary paperwork to remain compliant with IRS identification rules.
Mistake #4: Not Having Backup Properties
The Problem: Identifying only one property. If that deal falls through, you have no alternatives, and your exchange fails.
The Solution: Always identify three properties. Go under contract on your #1 choice with contingencies, but have #2 and #3 ready as backups.
Mistake #5: Ignoring Financing Timelines
The Problem: Assuming you can get financing approved and funded within 180 days without planning ahead.
The Solution: Get pre-approved for financing BEFORE Day 0. Know your buying power. Have your lender ready to move quickly.
Mistake #6: New Construction Delays
The Problem: Identifying new construction properties that aren’t complete yet. Construction delays mean you miss the 180-day deadline.
The Solution: Only identify properties that can close within 180 days. If you must do new construction, work with your QI to structure a construction/improvement exchange.
Mistake #7: Confusing the Deadlines
The Problem: Thinking you get “45 days + 180 days” (225 days total).
The Solution: Both deadlines run concurrently from Day 0. You have 180 days total, with identification due by Day 45. That leaves you 135 days (not 180) to close after identification.
Want help avoiding these mistakes? Schedule a free strategy session with a 1031 exchange specialist.
Meet Your 1031 Exchange Timeline With RealWealth’s Help
At RealWealth, we connect our members with trusted 1031 exchange facilitators and property teams that sell professionally managed turnkey properties in the top markets nationwide. Membership is 100% free, yes, free. If you want to stress less about the 1031 exchange timelines and deadlines, join RealWealth today!
Frequently Asked Questions
A 1031 exchange lets real estate investors defer paying capital gains taxes when they sell an investment property and purchase a “like-kind” replacement property with the proceeds. You must use a Qualified Intermediary (QI) who holds the funds, identify replacement properties within a 45-day window, and close within 180 days. Learn the complete rules and step-by-step process →
There are seven primary IRS rules that all 1031 exchanges must follow:
1. Like-Kind Property – Both properties must be investment real estate
2. Investment Property Only – No primary residences or personal use
3. Equal or Greater Value – Replacement property must be worth same or more
4. No Boot – In order for the exchange to be completely tax-free, you must not receive a “boot.”
5. Same Taxpayer – Title must be in the same name as the taxpayer on the relinquished property.
6. 45-Day Identification – Identify up to 3 properties within 45 days (no extensions)
7. 180-Day Purchase – Close on replacement within 180 days (no extensions)
You have 45 calendar days from the closing of the rental property you are selling to identify up to three replacement properties and a total of 180 days to close. These IRS deadlines are very strict with no extensions, so proper planning is critical. See the complete 8-step timeline and avoid missing deadlines →
Start early, and do so long before you put your property on the market. Planning early reduces the anxiety of the 45-day identification window, helps you connect with the best QIs, lenders, property teams, and find the best 1031 exchange replacement properties so you can meet all of your deadlines and not end up stressed out and settling for mediocre deals. RealWealth can help streamline the process for you, by connecting you with trusted 1031 exchange qualified intermediaries and property teams who have turnkey rental properties for sale now.
The IRS mandates two critical deadlines. The identification period is a 45-day window to identify potential replacement properties. The exchange period is the acquisition of the replacement property, which must be completed within 180 days of the sale of the relinquished property. Learn more about 1031 exchange timelines and mistakes to avoid →
There are four main types of 1031 exchanges in real estate: Delayed Exchange (most common, where you sell first and then buy), Simultaneous Exchange (where you close both properties on the same day), Reverse Exchange (where you buy first and then sell), and Construction Exchange (where you make improvements using exchange funds). Each has different requirements and timelines. Compare all four types and choose the right one →
Yes, a 1031 exchange qualified intermediary is required by law for 1031 exchanges. The QI holds the sale proceeds, prepares documents, coordinates closings, and ensures IRS compliance. If you touch the funds at any time without a QI, you’re disqualified and will owe capital gains taxes. Learn what a QI does, costs, and how to find one →
To find 1031 exchange investment property, focus on markets with population growth, job growth, affordability, low property taxes, and landlord-friendly laws. Start your search before selling and consider multiple properties in two to three markets, so if one of the rental properties falls through, you have a backup plan. Get the 12 rules for identifying cash-flowing replacement properties →
While all RealWealth property teams have ample inventory for 1031 exchange replacement properties, some of the most popular locations have been Dallas-Fort Worth, Alabama (including Birmingham and Huntsville), San Antonio, Jacksonville, Tennessee, and Cleveland. These markets offer strong cash flow, appreciation potential, affordability, and landlord-friendly laws with available turnkey rental property inventory. Explore available properties in top markets now →
Yes! As long as the properties meet the “like kind” requirement and you can replace the full value of the relinquished property or properties, you can defer all capital gains taxes with a 1031 exchange.
Yes, you can exchange a California investment property for an out-of-state 1031 exchange investment property, provided you follow the rules. However, California requires annual Form FTB 3840 filings to track deferred gains until you sell or pass away (please consult with your tax advisor or CPA). Many investors exchange their high-equity California rental properties to dramatically increase cash flow in landlord-friendly states. Learn about California-specific requirements and why investors leave →
Buy properties in appreciating markets, hold for 4-6 years while they generate cash flow and appreciate, then exchange them for multiple properties in growth markets. RealWealth’s investment counselor Joe Torre turned two properties into five, then plans to turn two into four again—doubling his portfolio every four to six years. Read the complete portfolio doubling case study and strategy →
Yes, RealWealth offers a free 1031 Exchange Masterclass webinar covering all the critical rules, timelines, qualified intermediaries, partial exchanges, and real investor case studies. The webinar features a live Q&A session with 1031 exchange professionals and is ideal for both new and experienced real estate investors. Watch the free 1031 exchange masterclass now →
RealWealth connects its members with property teams that sell off-market, turnkey rental properties in top U.S. markets. These turnkey teams sell single-family and multi-family properties that are fully rehabbed or newly built, and come with property management in place. Free membership includes one-on-one strategy sessions and ongoing support from investment counselors who specialize in helping real estate investors find replacement properties within the 45-day deadline. Get help finding properties fast →
RealWealth specializes in connecting investors with vetted turnkey property teams in landlord-friendly states across the U.S. Our network includes trusted providers in top markets like Texas, Alabama, Tennessee, and Ohio—all offering professionally managed, 1031-eligible properties with strong cash flow and appreciation potential. Connect with vetted property teams now →
Before you begin your search, it’s critical that you know that the 1031 exchange intermediary industry is not well-regulated. Be very careful with whom you use and be sure that they will not invest your money in risky ways while you are in between purchases.
You could start by getting referrals from escrow officers, researching online reviews, and checking credentials. Look for a 1031 exchange facilitator with thousands of successful exchanges and experience with your specific exchange type (delayed, reverse, or construction). Learn how to find and vet a qualified intermediary →
To save time, become a RealWealth member (100% free). We have worked with the same reputable 1031 exchange facilitator for over a decade. We know they are great, because we use them too! Let us introduce you →
Start your search before selling. Focus on markets with strong cash flow and appreciation. Target properties in areas with population growth and job growth. Choose landlord-friendly states with low property taxes. Work with property teams that have immediate inventory to avoid missing your 45-day identification deadline. Get the 12 strategies for finding cash-flowing properties →
You can start by viewing sample investment properties here. But the best way to find qualified properties is to become a RealWealth member. After you join, schedule a strategy session with your investment counselor, who can help you identify a market that matches your goals and connect you with a property team that has 1031 exchange replacement properties for sale now. Depending on the market you choose, these turnkey properties may include single-family rentals ($120,000-$350,000), duplexes ($200,000-$600,000), and fourplexes ($500,000-$985,000) in markets such as Texas, Alabama, Ohio, and Tennessee. Properties range from rehabbed turnkey to new construction, with options for cash flow, appreciation, or hybrid strategies. View property types and examples by market →
A quick internet search will help you find 1031 exchange services. Whomever you choose, be sure to vet them thoroughly. Investors choose to work with RealWealth because we connect them to trusted 1031 exchange facilitators (whom we use ourselves) and vetted property teams. These teams have off-market turnkey properties in growth markets and have property management in place. In addition, we offer personalized strategy sessions with investment counselors who understand the stress of the timeline crunch. RealWealth membership is 100% free and provides access to educational content and a network of trusted professionals, including qualified intermediaries, attorneys, and CPAs. Explore services and get started free →
The key is to find a property of like kind. Based on what you are selling, your options may include single-family rentals for steady cash flow, duplexes and multi-family properties for higher returns, new construction in growth markets for appreciation, and rehabbed turnkey properties for immediate rental income. You can choose from markets offering various price points ($120,000-$985,000+) and investment strategies based on your goals. See available options in top markets →
RealWealth members get free access to a comprehensive directory of vetted professionals, including 1031 exchange qualified intermediaries, turnkey property teams, real estate attorneys, CPAs, lenders, and more—all experienced in real estate investing strategies. This network helps streamline your exchange process and ensures you’re working with trusted experts. Access the professional directory free →
If you don’t identify a replacement property within 45 days or close within 180 days, your entire exchange fails, and you’ll owe capital gains taxes on the full sale amount. Other risks include settling for an underperforming property due to time pressure, overpaying in competitive markets, or selecting a property in the wrong market that fails to meet your investment goals. Learn the complete timeline and avoid these risks →
Membership to RealWealth is free and gives you access to vetted Qualified Intermediaries (we’ve used them ourselves), off-market turnkey rental properties in landlord-friendly states, one-on-one strategy sessions with experienced investment counselors, educational webinars, and market research to help you complete your exchange successfully and meet critical deadlines so you avoid paying capital gains taxes. Get expert help with your 1031 exchange →
Membership to RealWealth is free and gives you access to vetted Qualified Intermediaries (we’ve used them ourselves), off-market turnkey rental properties in landlord-friendly states, one-on-one strategy sessions with experienced investment counselors, educational webinars, and market research to help you complete your exchange successfully and meet critical deadlines so you avoid paying capital gains taxes. Get expert help with your 1031 exchange →
